Moonstone: Changes in Legislation and the REs

The FSB just published a circular providing substantial relief to a number of FSPs regarding the requirement to provide it with audited financial statements. Please click here to download a copy of FAIS Circular 11 of 2011.

How does this impact on your preparation for the REs?

The first point to bear in mind is that legislation cannot be changed by the publication of a newsletter; it has to be done by means of a Board Notice.

A scary example of this is the fact that the newsletter announcing the extension of the final date for successful completion of the regulatory examinations has not yet been ratified by means of a Board Notice. This means, in effect, that the deadline is still 31 December 2011.

Secondly, one should bear in mind that there is a specific process that needs to be followed when drawing up questions, or amending existing ones. This includes moderation, trials and pilots. To cater for this, the FSB allows six months (from date of publication of the relevant Board Notice) for the changed legislation to be incorporated in the regulatory examination questions.

This does of course create problems for those candidates who keep abreast of changes in legislation. A real case may serve as an example of this dilemma:

Late last year, the penalties for transgressions of the FIC Act were changed. About a week after publication of the Board Notice, a candidate came across such a question. The reason for this was of course that the paper had been printed and sent to the relevant exam centre before publication of the Board Notice.

Ironically, the “right” answer was wrong, in terms of the legislation, and a “wrong” answer, given as one of four options, was right!

He contacted us, and the appeals committee ruled in his favour.

Which brings me to the final point: while the REs test an FSP’s knowledge of the current legislation, there is an additional burden on the FSP to stay abreast of new developments. This is not necessarily a negative requirement.

If you do not study amended requirements like the changes announced in the circular mentioned at the beginning of this article, you may find yourself incurring unnecessary expenses, and wasting precious time on things you should not be doing.

And ja, as our favourite rugby coach would say: it is extremely difficult to comply with legislation if you do not know what you are required to do.